Pina Colada Corporation manufactures car stereos. It is a division of Berna Motors, which manufactures vehicles. Pina
Question:
Pina Colada Corporation manufactures car stereos. It is a division of Berna Motors, which manufactures vehicles. Pina Colada sells car stereos to Berna, as well as to other vehicle manufacturers and retail stores. The following information is available for Pina Colada's standard unit: unit variable cost $ unit fixed cost $ and unit selling price to outside customer $ Berna currently purchases a standard unit from an outside supplier for $ Because of quality concerns and to ensure a reliable supply, the top management of Berna has ordered Pina Colada to provide units per year at a transfer price of $ per unit. Pina Colada is already operating at full capacity. Pina Colada can avoid $ per unit of variable selling costs by selling the unit internally.
Answer each of the following questions.
b
What is the potential loss to the corporation as a whole resulting from this forced transfer?
Managerial Accounting Tools for Business Decision Making
ISBN: 978-1119036432
7th edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso